Indian diamond traders look for direct tie-ups with Russia

Analysts believe there is a lot of potential for Indian jewellery companies to establish themselves in Russia. Source: PhotoXpress

Trade sources told an Indian newspaper that supply of roughs from Russia to Dubai and Belgium could be severely impacted if the US imposes economic sanctions.

With a looming threat of economic sanctions on Russia, India’s
gem and jewellery traders are looking to establish direct contacts with the
country to source rough diamonds, the Hindu Business Line reported on its
website. Trade sources told the paper that supply of
roughs from Russia to Dubai and Belgium could be severely impacted if the US
imposes economic sanctions.

In 2013, India imported 163.11 million carats of roughs worth
$16.3 billion, and exported 36.46 million carats of polished diamonds worth
$20.2 billion, the paper said, adding that direct imports of rough diamonds
from Russia stood at just $767 million. India has a major cutting and polishing
industry with cities like Surat and Jaipur being major centres. Direct supplies
of rough diamonds from Russia to India could boost trade in the industry to $5
billion, the paper said, citing sources.

The paper cited Vipul Shah, Chairman, Gem and Jewellery
Export Promotion Council, as saying that it was in India’s interest to source
diamonds directly from Russia. He told the paper that Russia was looking at selling
roughs directly to China and Dubai, and had signed agreements to explore the
possibility.

Russia’s burgeoning retail
jewellery market

Russia could also be a major retail market for Indian
finished jewellery. The Russian jewellery retail industry is growing with
annual turnover estimated to reach around $16 billion. Indo-Russian trade in
gems and jewellery trade is well below potential. Analysts believe there is a
lot of potential for Indian jewellery companies to establish themselves in
Russia through distribution and marketing offices, considering the heavy import
duties and very limited local manufacturing in Russia.

Gems and jewellery constitute 17 per cent of India's total
exports and the sector employs 1.5 million people.

Alex Popov, the President of Moscow Diamond Bourse, told RIR at
an exhibition in Mumbai in late-2012 that Russia was a promising market not
only for exports from India but as a platform to create joint manufacturing
units. “Indian technology is very advanced; add some Russian quality control
and such a joint venture would be successful. Moreover, such joint ventures can
also export jewellery to CIS countries where the demand for good quality
jewellery is growing.” Popov told RIR.